TOELDO, OH (Toledo News Now) - The 65 page indictment unsealed Wednesday outlines a massive conspiracy to defraud employees, IHOP corporate, investors, the Internal Revenue Service and federal, state and local law enforcement.
Prior to 2003, Tarek Elkafrawi owned and operated two IHOP franchises; one in Decatur, Illinois and the other in Evansville, Indiana. During his time in Decatur, the indictment alleges, Elkafrowi began a social friendship with Autumn Lee Tangas, an employee of IHOP Corporate in Decatur.
Between 2003 and 2006 Elkafrawi purchased, either entirely or in partnership with other investors, 6 other IHOP franchises. Those stores are located in Toledo (2), Holland, Findlay, Perrysburg and Lima. In 2007 Elkafrawi sold his stake in the Decatur, Illinois IHOP.
The indictment alleges Elkafrawi, with the help of Carlos Gamboa, Jose Leon-Gonzalez and others, worked to recruit and hire 200 illegal aliens to work in the restaurants.
The indictment states employees did not question the status of illegal aliens if they had some type of forged documentation, and if they did not, Elkafrawi, Gamboa and Gonzales would obtain fraudulent documentation for the employee.
Elkafrawi is also accused of cashing payroll checks to illegal aliens out of the restaurant's safe in order to avoid detection.
By manipulating the IHOP Corporate Point of Sale System, which tracks customer orders and payment, as well as employee time cards, Elkafrawi and other are alleged to have pocketed more than $1.2 million in income that was never recorded in the computer system.
Elkafrawi and store managers are also accused of editing employee time sheets, subtracting thirty minutes of worked time each day and diverting that money into personal accounts.
The indictment alleges Elkafrawi and Autumn Lee Tangas worked together to receive more than $500,000 in improper payments from IHOP Corporate.
In December of 2003, the indictment claims, Tangas lent Elkafrawi $50,000 to purchase the Findlay IHOP franchise. As an IHOP Corporate employee, Tangas was barred from investing in IHOP franchises, so a friend was named as the investor.
The indictment states that Tangas deposited more than $65,000 in checks to her personal bank account from either Elkafrawi himself or his IHOP franchise corporations between December 2004 and June 2005 as repayment for her initial investment. The indictment also says the friend fraudulently named as an investor received weekly paychecks and health benefits from one of Elkafrawi's IHOP franchises, despite never working at the store.
The indictment also states that Tangas used her position at IHOP Corporate to secure weekly $2,300 payments to one of Elkafrawi's franchises. The payments are intended to aid struggling franchises. Elkafrawi manipulated the franchises income to receive the payments, according to court documents. Although the payments were supposed to be temporary, the indictment says Tangas used her position to insure the payments continued for more than 5 years, totaling more than $500,000 in improper payments.
The indictment goes on to allege Elkafrawi and others manipulated financial statements, borrowed from and lent to the businesses to fraudulently reduce tax liability and defrauded the Ohio Bureau of Worker's Compensation to the tune of more than $35,000.
Arson and fraud
In 2008, Jose Leon-Gonzalez, and others who were not indicted, intentionally started a fire at the Findlay IHOP in order to collect insurance payments, the indictment claims. Elkafrawi then submitted $1.36 million in fraudulent insurance claims for the damage, it says.
The indictment also states Elkafrawi and Tarek Eid Omar devised schemes to collect medical and welfare benefits. They, along with other employees, created false identities in order to split their income between multiple paychecks and qualify for Medicaid and food stamps. One employee is alleged to have received $140,000 in Medicaid payments and $35,000 in food stamps and other welfare benefits from the state of Ohio.
Elkafrawi, Kelly Elkafrawi, Tarek Eid Omar and others are alleged to have engaged in real estate transactions in order to launder the proceeds from their frauds.
The indictment alleges Elkafrawi and other purchased two gas stations in Evansville, Indiana and homes in Newburgh, Indiana as well as Toledo, Sylvania and Maumee.
Elkafrawi is also alleged to have transferred proceeds from the frauds to foreign bank accounts both on his person and by electronic transfer.
Copyright 2012 Toledo News Now. All rights reserved.